The Fair Political Practices Commission has dismissed a complaint accusing former Orange County Republic Party chairman Tom Fuentes of breaking state laws by failing to disclose a business relationship with Newport Beach auction house Lang Financial Corporation, better known as LFC, while holding elected office.

Fuentes, a long-time trustee of a community college district and former senior vice president of LFC, maintained an office at LFC for about three years beginning around 2004, he told the Watchdog. But Fuentes never mentioned LFC on any of the economic disclosure forms he was required to file from 2004 to 2010 as a trustee of the South Coast County Community College District.

Roy Bauer, an ethics and political-philosophy professor for the district whose blog routinely criticize Fuentes, filed a complaint with the FPPC in January. The FPPC’s investigation confirmed what Fuentes had maintained: he did nothing wrong.

“We found that Mr. Fuentes did not receive compensation from LFC while a member of the South Coast County Community College Board of Trustees (SCCCBOT), and therefore was not require to report LFC as a source of income,” wrote Milad Dalju, commission counsel for the FPPC’s Enforcement Division, in a June 8 letter.

“LFC donated the use of an office to the Claremont Institute, which the Claremont Institute allowed Mr. Fuentes to use in his capacity as a fellow at the Claremont Institute, and Mr. Fuentes properly reported the Claremont Institute as a source of income on his Statement of Economic Interests,” Dalju wrote.

“We also found that, under these facts, Mr. Fuentes was not a director, officer, partner, trustee, employee, or held a position of management, at LFC while a member of the SOCCCBOT. He was therefore not required to disclose LFC as a business position,” Dalju wrote.

“I never doubted the FPPC would arrive at this conclusion,” Fuentes said in a statement. “Bauer’s charge was absolutely false and filed for the sole purpose of tarring my reputation. The FPPC saw through Bauer’s machinations, and dismissed it as having no basis in fact. I will say a prayer for Roy, and hope he is helped.”

Fuentes’ relationship with the auction house and with Public Administrator and former Public Guardian John S. Williams, who used LFC for land sales, drew the interest of county officials.

Williams’ office was criticized in two Orange County grand jury reports in 2009, and has come under renewed fire since August. That’s when former state Assemblyman and county supervisor Todd Spitzer was fired from his post at the Orange County District Attorney’s office after he started asking questions about a conservatorship being handled by Williams.

Fuentes and Williams served together on the community college district together for years until Williams resigned in December.

Williams also gave a testimonial for LFC on the company’s website, praising LFC’s Internet-based auction program and highlighting its work to help Orange County out of its bankruptcy in 1990s.

County officials worry that this is all too cozy; the supervisors ordered a review into the Public Administrator/Public Guardian’sOffice along with its dealings with LFC.

In an email obtained by The Watchdog through the California Public Records Act, Fuentes explained to Williams his relationship with LFC. Williams had asked him to write the explanation, Fuentes told The Watchdog.

Fuentes acknowledged in the Sept. 28 email he had maintained the office space and had access to a company email account. But Fuentes maintained “I have no financial interest in LFC, nor do I receive any compensation from LFC.”

“I’ve never been on their payroll,” Fuentes told us. “I have no fiduciary interest in LFC.”

As for his Statements of Economic Interest, no disclosure was made of his relationship with LFC because no money was changing hands, he said. And the title of senior vice president was merely a courtesy title given by the owners of LFC, who are lifelong friends.